The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have teamed up to launch a new TV and radio advertising campaign to raise awareness of pension scams.
The series of adverts highlight the most common tricks that are employed by fraudsters.
Pensions have become a lucrative target for fraudsters following the introduction of pension freedoms in April 2015, which have given savers access to their retirement savings from the age of 55.
Close to £19 million was stolen from pensions between April 2015 and March 2016, double the level of the previous year, with victims losing an average of £91,000.
Nicola Parish, executive director of frontline regulation at TPR, says: “£91,000 is a huge amount of money for someone approaching their retirement to suddenly have ripped from their savings. If someone cold calls you about your pension, it’s probably an attempt to steal your savings. Our message is clear – hang up and report it.”
Common pension scam approaches
The Money Advice Service believes as many as eight pension scam calls are made every second. Meanwhile, research from Citizens Advice suggests that 10.9 million individuals have received unsolicited contact regarding their pension since the new rules were introduced.
Potential victims are most likely to be approached over the phone. Fraudsters usually encourage savers to take lump sums out of their pension to invest in a scam, or to transfer their entire pot into a rogue investment. Pension industry estimates suggest that as many as 10% of all pension transfer requests are fraudulent.
At the end of July, Moneywise reported that the government had launched a fresh consultation into its long awaited ban on pensions cold calling. The government had been expected to finalise legislation to prevent unsolicited calls in June but missed its deadline.
A poll conducted by the regulators confirmed that almost a third (32%) of people aged between 45 and 65 do not know how to check whether a person they were dealing with is a legitimate provider or adviser.
In many cases targets will be offered a ‘free pension review’ – an offer close to one in eight (12%) of the people polled by the FCA and TPR said they would trust.
Nathan Long, senior pension analyst at Hargreaves Lansdown says: “Rule changes that gave huge freedom to retirees have also inadvertently given fraudsters the pension equivalent of the keys to the sweet shop. Scams that target pensioners are wide ranging, potentially complex, and are often initiated by unsolicited phone calls, texts or emails."
He adds: “Scams tend to have one thing in common despite their variety, as they offer retirees something that is too good to be true. Your best bet is to ignore any approaches when you are contacted out of the blue about your pension. It’s safest to only deal with regulated firms allocating your hard-earned pension savings to regulated investments.”
‘Always check who you are dealing with’
Both the FCA and TPR encourage savers to be “ScamSmart” and always check that they are dealing with a regulated adviser or company before doing anything with their pension.
The two organisations advise consumers to follow these four simple steps:
- Reject all unsolicited approaches made over the phone, online, by text or on social media
- Check the adviser or company name on the FCA register (https://register.fca.org.uk) or call the FCA on 0800 111 6768
- Don’t be rushed or pressured into making a decision
- Consider getting impartial advice or guidance